Standing Committee B

[Mr. Derek Conway in the Chair]

Enterprise Bill

Derek Conway: Before I call the Minister, I remind hon. Members and anyone else of interest that the mobile phone is not yet part of our proceedings, even if it has a Verdi ring tone. I ask everyone to check so that we are not interrupted by technology.

Melanie Johnson: I beg to move
That— 
 (1) during proceedings on the Enterprise Bill the Standing Committee do meet on Tuesdays at 10.30 am and at 4.30 pm, on Thursdays at 9.30 am and between 2.30 pm and 5 pm and on Wednesday 1st May at 10.30 am and between 4.30 pm and 7 pm, except that on Tuesday 30th April the Committee shall not meet at 10.30 am and on Thursday 2nd May the Committee shall not meet; 
 (2) the proceedings shall be taken in the following order, namely Clause 1, Schedule 1, Clauses 2 to 11, Clause 196, Clauses 16 to 18, Clauses 179 to 195, Clause 198, Clauses 200 and 201, Schedule 13, Clauses 202 to 226, Clauses 20 to 66, Schedule 5, Clauses 67 to 81, Schedule 6, Clause 82, Schedule 7, Clauses 83 to 86, Schedule 9, Clauses 87 to 160, Schedule 8, Clauses 161 to 174, Clause 197, Clause 199, Clause 175, Schedule 10, Clauses 176 to 177, Schedule 11, Clause 178, Schedule 12, Clause 12, Schedule 2, Clauses 13 and 14, Schedule 3, Clause 15, Clause 19, Schedule 4, Clauses 227 and 228, Schedule 14, Clauses 229 to 231, Schedule 15, Clauses 232 to 239, Schedules 16 and 17, Clauses 240 and 241, Schedule 18, Clauses 242 to 245, Schedule 19, Clause 246, Schedules 20 and 21, Clauses 247 to 252, Schedule 22, Clauses 253 to 257, Schedule 23, Clauses 258 to 264, Schedule 24, Clauses 265 and 266, Schedules 25 and 26, Clauses 267 to 269, New Clauses and New Schedules; 
 (3) the proceedings on Clause 1, Schedule 1, Clauses 2 to 11, Clause 196, Clauses 16 to 18, Clauses 179 to 195, Clause 198, Clauses 200 and 201, Schedule 13 and Clauses 202 to 226 shall (so far as not previously concluded) be brought to a conclusion at 9.55 pm on Tuesday 23rd April. 
 (4) the proceedings on Clauses 20 to 66, Schedule 5, Clauses 67 to 81, Schedule 6, Clause 82, Schedule 7, Clauses 83 to 86, Schedule 9, Clauses 87 to 160, Schedule 8, Clauses 161 to 174, Clause 197, Clause 199, Clause 175, Schedule 10, Clauses 176 and 177, Schedule 11, Clause 178, Schedule 12, Clause 12, Schedule 2, Clauses 13 and 14, Schedule 3, Clause 15, Clause 19 and Schedule 4 shall (so far as not previously concluded) be brought to a conclusion at 1 pm on Wednesday 1st May; 
 (5) the proceedings on Clauses 227 and 228, Schedule 14, Clauses 229 to 231, Schedule 15 and Clauses 232 to 238 shall (so far as not previously concluded) be brought to a conclusion at 7 pm on Wednesday 1st May; 
 (6) the proceedings on Clause 239, Schedules 16 and 17, Clauses 240 and 241, Schedule 18, Clauses 242 to 245, Schedule 19, Clause 246, Schedules 20 and 21, Clauses 247 to 252, Schedule 22, Clauses 253 to 257, Schedule 23 and Clauses 258 to 260 shall (so far as not previously concluded) be brought to a conclusion at 5 pm on Thursday 9th May; 
 (7) the remaining proceedings on the Bill shall (so far as not previously concluded) be brought to a conclusion at 7 pm on Tuesday 14th May.
 I welcome you, Mr. Conway, and your co-Chairman, Mr. Beard, to the Chair of the Committee. I have spent many happy hours in Committee Room 10, not Committee Room 11, so this venue is a change of scene for us all. I am grateful 
 for the opportunity to debate the Bill with Committee Members. I hope that it will be useful, and I am sure that Members will make constructive progress. However, if they do not, I know from previous experience that it is the Chairman's role to ensure that the proceedings are conducted in a businesslike way. I know your qualities, Mr. Conway, and I am sure that you will carry out that role. 
 I recall a Chairman in one Committee, who shall remain relatively anonymous. At the first sitting, he removed his jacket and advised other Members that they could do the same if they so wished because of the temperature. He revealed what looked remarkably like a gun holster arrangement, although there was no weapon in it. He later informed us that the holster was for his mobile phone. However, there was a strong resonance, as we suspected that it might have something to do with his other activities and be a new approach to enforcement. 
 The usual good will of Committee Chairmen will be sufficient to conduct business in this Committee. As you say, Mr. Conway, carrying around mobile phones can be dangerous in its own right. 
 I have a background in business, local authorities and many other aspects of life outside the House, and I am delighted to share the Committee with Opposition Members with their own backgrounds. It is an honour to face an Opposition Bench of former special advisers and civil servants that is laden with such talents. The hon. Member for South Cambridgeshire (Mr. Lansley) protested on Second Reading that he was definitely a civil servant and not a special adviser. We must acknowledge those distinctions in this Committee. 
 It usually falls to the senior Minister to provide a strategic overview of the Bill in Committee. In my experience, he or she then disappears for the rest of the proceedings. I will provide the strategic overview, but I will not disappear. It is important that we consider the Bill in as timely a way as possible. 
 The proposed programme resolution was discussed at the Programming Sub-Committee yesterday, and I am pleased that there was a general agreement on it at that meeting. The end date of 14 May will allow us 17 sittings to consider the Bill and any new clauses or schedules that may be proposed by amendment. The Government will table several amendments, but aim to give the Committee good notice of them. We will provide a written explanation of the nature and effect of each amendment when it is tabled. 
 The 17 sittings should provide enough time for proper scrutiny of the Bill. I say that in full recognition of the size of the Bill and the concerns that Opposition Members have expressed. However, as we heard on Second Reading, there is a good measure of support on both sides for many, if not most, of our proposals. We will, of course, work hard in the Committee to examine the Bill thoroughly and carefully. I hope that we will be focused and consensual in our work, and I am sure that we will be extremely constructive and make your job easy, Mr. Conway. 
 The resolution proposes that the provisions of the Bill be considered in order, with two main exceptions. We propose to give Committee members additional 
 time to prepare for debating the lengthy competition provisions in parts 3, 4 and 5, which together amount to more than 150 clauses. We propose to consider those parts after the consumer provisions of part 8 but before the information disclosure provisions of part 9, which are closely related and highly relevant to them. Consideration of part 2 most sensibly belongs after the competition provisions, because it relates to appeals against the various decisions that will be discussed in those proceeding parts. The Programming Sub-Committee also agreed that we could bring forward consideration of clauses 16, 17 and 18, which will be examined immediately before part 6. 
 I hope that Committee members will agree that the proposals constitute a sensible and reasonable way in which to proceed, and I ask them to support the resolution.

Derek Conway: Before we develop the debate further, it might help Members to know that the programme resolution is at the back of the amendment paper, which is unusual. It is perhaps the system's way of ensuring that the Chairman is awake for at least this part of the sitting.

Nigel Waterson: I begin by saying what an enormous pleasure it is to serve under your chairmanship, Mr. Conway, and that of your co-Chairman Mr. Beard, on what I am sure will be an enjoyable Committee stage. I echo the Under-Secretary's remarks, particularly her kind comments about my colleagues and me. Flattery will get her nowhere, but it was nice given our slightly rocky start.
 I congratulate the Government Members, who were lucky enough to have their name picked out of a hat to serve on the Committee. I know that they are looking forward to it immensely. The only downside about serving on a long Committee—not as long as it should be, of course—at this time of year is that Government Back Benchers will not have the option of doing their Christmas cards, unless they are particularly well organised. 
 I pay a particular welcome to the hon. Member for South Ribble (Mr. Borrow), who spoke on Second Reading. At that stage, he seemed to be labouring under the misapprehension that this was a 120-clause Bill, when of course it has 269 clauses. That may reveal one of two things; either a deficiency in his research in not getting beyond the first page of the Bill's contents, or perhaps that the Government Whips told him that there were only 120 clauses in order to get him to agree to serve on the Committee. I know that you are a former Whip, Mr. Conway, and I am sure that that would never have happened in your day, but it is possibly why the hon. Gentleman was arithmetically challenged about the Bill. 
 As the official Opposition, our job is to scrutinise the Bill carefully. As the Under-Secretary said, there are broad areas of welcome and agreement. They were apparent on Second Reading—we did not vote against the Bill or table a reasoned amendment—and we agree with much in the Bill. As I will describe later, much of it will build on the landmark consumer legislation of the Conservative Government of the early 1970s, which we agree that it is time to revisit. We will be 
 trying to improve the Bill and make it more effective and relevant to the people who will have to enforce it and those who will be governed by it. I hope that we can disagree on issues without being disagreeable. 
 However, we have got off to a rocky start. It is difficult to divine the Government's motives because, as I said on Second Reading, many clauses in the Bill are free from any party-political content. They are simply highly complex and technical measures that require careful scrutiny. Although we understand the pressures, we were a little surprised that the Bill was continually delayed. We were even more surprised when the Bill was published on the day the House rose for the Easter recess with Second Reading planned for the day after that recess. The Government made a concession to move it by one day, which was rendered of nil effect because of the sad death of the Queen Mother, so we actually debated Second Reading when we came back after Easter. 
 All that presented problems, which we have wrestled with in a spirit of good will—we appreciate the pressure on parliamentary draftsmen and hope that we shall have to wrestle with it again in the not too distant future—but we did our best. If we are to produce a good Bill, we need the right people to comment and brief us on it. That means organisations, bodies, companies and individuals, ranging from the CBI, the Law Society, the Trading Standards Institute and consumer bodies; the list is almost endless. Such organisations were caught on the hop, as we were. The Easter holiday is not the best time to expect people to produce their suggestions for amendments or their briefings on a complex Bill. As I said, we wrestled with that; if I still owe Mrs. Waterson a large bunch of flowers for the disruption to the Easter holiday, so be it. 
 At the end of last week, however, without any hint to us or to the Liberal Democrats, the Government tabled a motion that significantly changed the order of consideration. We had expected that the Committee would consider the Bill in the printed order. Unlike in some other Bills, this one had an element of logic in its arrangement; we could have started at clause 1 and worked our way through—for the benefit of the hon. Member for South Ribble—to clause 269. But that was not to be and the result has been a scramble over the past 24 hours to procure briefings and suggested amendments from the various organisations. 
 If I seem to be labouring the point, or if the Minister thinks that I am being churlish, it is because these matters were debated last night in the Programming Sub-Committee under your chairmanship, Mr. Conway. It is a feature of the procedures introduced by the Government that no record is kept of that debate; it is an entirely closed meeting with no access provided to the public or anyone else. It is important to place these matters on the record. 
 One result is that we shall be dealing much earlier with the part of the Bill dealing with cartels, yet not a single amendment on that subject had been tabled by the Conservatives when the change was announced. Not unreasonably, we had focused on the earlier parts of the Bill, as had our advisers and others with whom 
 we were in contact for briefings and potential amendments. 
 I know that the hon. Member for Twickenham (Dr. Cable) had a similar experience over the last 24 hours. The change has caused considerable irritation and disruption to the people on whom we rely to ensure that we make good law; let us be clear that, in the modern world, Standing Committees largely have to rely on outside bodies with their resources, concerns and knowledge of the issues. Those organisations have had enormous problems and are doing their best to overcome them. 
 In fairness, as I acknowledged, the Government have made modest concessions, for which we are grateful, in respect of where the so-called knives fall to terminate debate. The order of consideration has also been tweaked. One cheer for the Government on that, but it was a problem of their own making, so neither the Under-Secretary nor anyone else should try to draw much comfort. 
 We still believe that the Bill should be considered in its right order. I have yet to hear any good reason for changing it. If there were one, it could have been discussed through the usual channels. As I said earlier, I see little scope for party-political wrangling in the Bill, though we may find some as we move along, if only to keep some members of the Committee awake. Therefore, it is all the more surprising that the Government seem unable to consult on these ideas. 
 I am always a great believer in the slip-up theory—I would not want to use unparliamentary language—rather than the conspiracy theory, so another explanation may be that the Government are taking the Bill at a tremendous gallop. I can perhaps understand why, because it has clearly been a large Bill to draft and lick into shape. We know the pressures on the parliamentary draftsmen. The Government want to ensure that the Bill leaves this House and goes to the Lords quickly, after which it will return here for any further consideration. 
 I can understand that, but this is a very large Bill by any view; it contains 269 clauses and 26 schedules. A sprinkling of new clauses have already been tabled, and the Under-Secretary has indicated—it would be difficult not to—that there will be Government amendments. I predict that there will be quite a lot of Government amendments as errors or oversights in the drafting become apparent during our debates. Indeed, I think that, according to the programme, a whole day has been set aside at the end of the Committee stage for new clauses and Government amendments, so we shall see. 
 The reality is that, however one views the resolution, we are looking at 17 sittings to consider a Bill of this magnitude. We shall not vote against the programming motion, because we want to get on to the meat of the Bill and do our best to scrutinise it. However, I want to state firmly on the record, as I did on Second Reading, that with the best will in the world, at least parts of the Bill will not receive proper 
 scrutiny in Committee, which is a great shame. We would have been happier with a longer Committee stage, and we will be willing to sit later where that is appropriate and will make a difference. To expect the entire Bill to be considered properly and in depth in 17 sittings is wholly unrealistic. 
 I say that more in sorrow than anger, because from a political point of view it may make little difference. However, it will make a great difference out there in the real world. We are talking about highly complex provisions on competition, mergers and insolvency. Indeed, the insolvency provisions are in the last part of the Bill; the part that often does not receive the close scrutiny that the earlier parts do. The insolvency part is highly complex and detailed, and I am receiving shoals of proposed amendments and briefings from people and organisations that are supposed to have been consulted in depth before the Bill was published. 
 The consumer provisions are novel, interesting and deserve lengthy debate. In some respects, they do not go far enough, but they certainly require close examination to ensure that they will work and deliver what the Government are promising. There are also other measures to consider, including those that set up the Office of Fair Trading, so this Bill is something of a Christmas tree. Bits of Bills, or even potentially separate Bills, are being dealt with now. Again, I do not complain about the Government taking their opportunity. One sees a slot in the legislative programme and goes for it, trying to cram into it as much as possible. It may be many years before any Government has time to revisit in depth the fair trading legislation, for example, and other complex issues, so I understand the situation. However, for all those reasons, and perhaps others of which we are unaware, the Government are trying to take the Bill at a gallop. That may be a real problem with regard to producing good law on complex matters. 
 As I said, we shall not vote against the resolution. We accept that the Government would push it through in any event and that they wish the Bill to be out of Committee by 14 May. We cannot argue with that; all we can do is say, ''We told you so'', as and when the new law begins to cause problems in practice.

Vincent Cable: I echo the hon. Member for Eastbourne (Mr. Waterson) in welcoming you, Mr. Conway, other hon. Members and the Minister to the Committee. She cut her ministerial teeth on the Financial Services and Markets Act 2000, which was even longer and more complicated than this Bill, so she is well prepared for what may come.
 My approach, and that of my colleagues, will, I hope, be constructive and businesslike as well as critical. There is quite a lot to criticise, not in a doctrinaire or party-political way, but simply in order to get the legislation right. I am struck by the fact that this is a big Bill. The financial services legislation went through a great deal of pre-legislative scrutiny. Indeed, a Standing Committee of both Houses looked at it in detail, providing a platform for the legislation. This Bill is coming into the House in a much less digested state, despite being very big and complicated. It is likely that it will contain all kinds of flaws that will 
 need to be corrected through the scrutiny process. I hope that the Government will approach the Bill in a humble spirit, recognising that there is probably quite a lot of scope for legislative improvement. 
 I echo what the hon. Member for Eastbourne said about the programming meeting yesterday. All parties have agreed to the process, and we shall not try to claw that back. However, considerable unhappiness was expressed. The basic problem is that by inverting the order of the Bill, the Government have left themselves, their Members and us relatively unprepared to deal with some quite tricky pieces of legislative work. 
 I shall give two examples, although I do not want to prejudge the discussion on them. One item that now comes quite early in the proceedings is the criminalisation of cartels. We recognise that that is not necessarily a very intricate piece of legislation, but it is important. Business lobbies, whose members may go to jail as a result of the Bill, will understandably want to ensure that it is right. They need time to reflect on it and to talk to their lawyers. They will now be bounced into the debate rather early. We share their concern that that is not the right way to proceed. 
 Equally, the consumer part of the Bill, which was to have come at the end, now comes much earlier in the proceedings. That worries me particularly. I have been in this post on the Liberal Democrat side for over two years, so I probably have a rather greater institutional memory than the Under-Secretary. A couple of years ago, when the Bill was first mooted, it was seen as a consumer Bill. That was its genesis. The Government view at that time was that if re-elected, they would ''do'' consumer protection, as they had ''done'' competition policy and insolvency. There were ambitious ideas for consumer protection, which I fully shared. In practice, the consumer protection aspects have been put in the lower part of the Bill, but they are none the less very important and raise important issues of principle and implementation, such as how the stop now laws will be applied. 
 It was clear on Second Reading that we have got into a new situation. Many of the consumer groups, such as the National Consumer Council, the Consumers Association, the National Association of Citizens Advice Bureaux and others, expected that that part of the Bill would offer wide-ranging powers to enable them to tackle abuses that are not currently illegal, yet present serious problems. It became clear from the Ministerial response that this would not now happen. 
 Within a week—probably less under the new timetable—those groups will have to consult with each other, with us and with their lawyers to provide a completely new approach to the problem. That is very unsatisfactory. The Committee may not get it right because of the pace with which the matter is being dealt. That particular inversion of order is very unhelpful to proper legislative scrutiny.

Nigel Waterson: On that point, we have tabled several amendments on clause 202, which have been prepared at quite short notice for us by consumer organisations. I hope that when we come to debate them, the Under-Secretary will not read from a brief to
 say that they are poorly drafted or do not have the required effect, because there simply has not been the time to sit down and consider them.

Vincent Cable: The hon. Gentleman is right. Indeed, a set of clauses deals with that point. Over the last few days it has occurred to me that if the Government cannot create an all-purpose clause to deal with the consumer protection problem, it may be necessary to introduce into the Bill separate clauses—probably separate chapters—for some of the worst abuses, which continue. That will be a tricky exercise. I am not sure how we or the Government will handle it. Our key point—and that of the hon. Member for Eastbourne—is that we all, including the Government, need time to talk to the groups concerned with the issues to get the legislation right.
 That is the essence of what I wish to say. I do not wish to prolong the debate on the resolution; we are keen to get on with the substance of the Bill. Our discussion has been amicable but has sown worries in our minds that the Government are not being as sensitive as they should be to some of the concerns about the Bill.

Jonathan Djanogly: Although I do not have a direct interest to declare, I am a partner in a firm of solicitors and therefore have an indirect interest.
 I add my concerns to those expressed by my hon. Friend the Member for Eastbourne. The Government spent some time in consultation on the Bill; the two years of consultation is highly disproportionate to the four or five weeks, and 17 sittings, that we have been given. I have been a member of the Committee—which has just finished—discussing the Adoption and Children Bill. It was much shorter and less complex than the Enterprise Bill, but at the end of our allocated 24 sittings, and after bipartisan and non-contentious discussions, we had not covered a third. I do not know what will remain of the Enterprise Bill at the end of the allocated sittings. The programming has serious implications.

Mark Field: Like my hon. Friend the member for Huntingdon (Mr. Djanogly), I shall speak briefly as the more time we spend discussing the programming motion, the less time we have to look at the substantive issues. I entirely endorse what my hon. Friend the Member for Eastbourne said. My main concern is that the Bill is a mish-mash—perhaps to be in keeping with the Government's proposed joined-up thinking—that introduces important but separate issues. As I know from my limited experience, the Bill is unlike many other Bills, which have a theme running through them. As my hon. Friend the Member for Eastbourne said, the insolvency provisions themselves will lead to many representations from professional and other bodies in the City of London, which is part of my constituency. There is great concern that the issues will be rushed through. The risk is that by the end of the 17th sitting in mid-May, very many clauses will not have been touched and others will have been looked at only discursively. The die is cast for the Committee stage but the Opposition will want increased scrutiny on
 Report if we have not had the opportunity of expressing our concerns.
 As several hon. Members have said, the Bill has much to commend it. The concerns about it will contribute to ensuring that it works, which is a vitally important part of any Standing Committee. There will also be issues of principle, perhaps with a party-political element; I hope not in a knockabout spirit, but a constructive one. 
 As we are approaching the 11 am guillotine, I will give the Under-Secretary the last word on the subject and then battle can commence.

Melanie Johnson: I will have a brief last word, in the spirit of the contribution of the hon. Member for Cities of London and Westminster (Mr. Field). First, I am glad that he and other hon. Members said that there is much to commend in the Bill. We all agree about that, although there is a little disagreement among the Opposition about whether the Bill hangs together well; the hon. Member for Eastbourne said that it did and other Opposition Members said that it did not. I obviously agree with the hon. Member for Eastbourne that the Bill comprises a coherent package of measures that belong naturally together.
 On the matter of the longer Committee stage, there was extensive consultation on the White Paper last summer and earlier consultations on the mergers element, which, as I said, is an extensive part of the Bill. As the hon. Member for Twickenham remarked, we had previously published papers on the consumer side of things and on some insolvency matters. Much of the Bill has been discussed before. In relation to the remarks of the hon. Member for Huntingdon, there is a balance to be struck, but, as he acknowledged, there were two years of consultation on the Bill and that is why we do not need to spend so much time on it in Committee. We have had extensive consultations recently with many of the interested parties; as the hon. Member for Twickenham said, it is worth remembering that the Government and, I am sure, all members of the Committee, want to get the Bill right— 
 It being half an hour after the commencement of proceedings on the motion, The Chairman put the Question, pursuant to paragraph (9) of the Order of the House of 28 June 2001 relating to Programming Sub-Committees. 
 Question put and agreed to.

Derek Conway: I remind the Committee that copies of the financial resolutions connected with the Bill are on the Table. I remind hon. Members, too, that adequate notice should be given of amendments; as a general rule, my co-Chairman and I do not intend to call starred amendments, including any that may be reached during an afternoon sitting of the Committee.

Clause 1 - The Office of Fair Trading

Question proposed, That the clause stand part of the Bill.

Melanie Johnson: The clause will create a new body corporate to be known as the Office of Fair Trading, or the OFT. The organisation currently known as the OFT is not a statutory body, but simply the administrative support that has grown around the Director General of Fair Trading—the DGFT—to support him in the exercise of his statutory functions. The office of DGFT is abolished in clause 2.
 The OFT name has traditionally been used when publicising and explaining the work of the DGFT. However, references in the Bill to the OFT are purely to the new corporate authority proposed in the clause. The new OFT will consist of a board, headed by a chairman. The board will include non-executive members and people with a range of skills, expertise and abilities relevant to competition or consumer protection. It will widen the expertise involved in decision making and will strengthen the link between competition and consumer protection. It will also depersonalise regulation in this important area. 
 The DGFT currently has a wide range of functions in the areas of competition and consumer protection, many of which are being reformed in the Bill. The Government believe that in the light of the reforms, it is no longer appropriate for all those powers to be vested in one individual. John Vickers, the current DGFT, supports the proposals. He has worked closely with me on taking this forward and I value his support. 
 The new OFT will be independent, encompass a broad mix of interests and skills in the decision-making process, will be fully accountable through working arrangements that are open and clear, and will be able to act swiftly and effectively.

Nigel Waterson: Like my hon. Friend the Member for Huntingdon, I, too, declare an interest, although I am not convinced that it needs to be declared. I refer the Committee to my entry in the Register of Members' Interests. I am a solicitor practising in commercial law in the City, now and again.
 The debate on clause 1, although it is relatively uncontroversial, will be useful because it sets the tone for the consumer protection aspects of the Bill and it is worth a nod at its historical context. As the Under-Secretary said, the Office of Fair Trading already has a virtual existence, although it is not formally established, and we welcome the fact that it is to be set up. The hon. Lady stated that it is the trend, rather than having one individual, that there should be a corporate approach to regulation. She said, too, that a range of skills was needed and we will have a short debate on the board later. It is important that there should be a wide range of skills, if possible. 
 Understandably, most Governments never seem to make consumer protection legislation a high political priority. Like Halley's comet, it comes around about once every 30 years. I can testify to that, as at the time of the fair trading legislation in the early 1970s I was a 
 research assistant to Sally Oppenheim-Barnes, who was the hon. Member for Gloucester and is now in another place. We did a great deal of work on consumer protection issues. The first section of the Fair Trading Act 1973 relates to setting up the office of the Director General of Fair Trading. 
 In 1972, a Conservative political centre published a pamphlet called ''Square Deal for Consumers'', which makes interesting reading. The noble Lady Oppenheim-Barnes was a contributor and a luminary, as was the late Nicholas Ridley. The pamphlet also mentions an obscure young researcher called Nigel Waterson, who turned into an obscure middle-aged Front-Bench spokesman. Such is life. Thirty years have passed, and here we are, revisiting the same issues. The pamphlet is actually rather interesting and I am prepared to lend it, as I have a whole box of them at home in the attic. It is amazing what one writes when one is young. 
 The pamphlet echoes some of the issues that are covered in the Bill: consumer advice and its availability to ordinary consumers; local authority responsibilities and their organisation; proposals for a national structure for consumer protection and for legislation in the aftermath of the 1971 Crowther report on consumer credit; the Sale of Goods Act 1979 and exclusion clauses, which were also matters for legislation; unit pricing; metrication, which was a novel concept at the time; shop hours; servicing of products; product safety; and—surprise, surprise—package tours, although timeshare probably takes their place as the more modern equivalent of an ever popular rip-off on consumers. The date-stamping of food is also featured. Nowadays, one can barely see what food one is buying because of the date stamps and ''best before'' dates. At the time, however, the proposal was new. The pamphlet also refers grandly to, 
 ''The implications of common market entry.''
 That golden age of consumerism followed on from the successes of people such as Ralph Nader in the United States. I am sure that the Under-Secretary will give due credit to the fact that the Government were Conservative and that they faced many other more major issues in their relatively short life. They took it upon themselves to propose and take through the fair trading legislation. As I said, the first section dealt with the Director General of Fair Trading, as does the first clause of the Bill. 
 On Second Reading of the legislation on 13 December 1972, the then Sir Geoffrey Howe said: 
''The Bill has two principal purposes—first, the promotion of increased economic efficiency and, secondly, the protection of the consumer against unfair trading practices.''
 He went on to make a point that has been a philosophical strand in the approach of successive Governments ever since: 
''these two purposes are complementary to each other.
They are both founded on the Government's firm belief that competition provides a means of diffusing power and responsibility throughout the community and of continually widening the area of freedom and opportunity. Competition provides spurs to efficiency and incentives to seek out and supply the varied wants of the consumer''.
 He also talked about the role played by 
''the army of traders, entrepreneurs and retailers . . . By serving themselves, all these people serve the wider community as well'',
 We should remember that during the passage of this Bill. 
 It is also interesting to note that Sir Geoffrey said 
''competition is not an automatic panacea''.—[Official Report, 13 December 1972; Vol. 337, c. 453–454.]
 That was during the era of Selsdon man, an early version of what became Thatcherism, but even then there was no concept of unbridled competition red in tooth and claw. There was then a firm commitment by the Conservative Government, as there is by the current Conservative Opposition, to introduce regulation where appropriate, encourage competition and remove bars to proper consumer protection. Sir Geoffrey went on to talk about the sovereignty of the consumer, which he said should not be taken for granted, and about the need for consumers to be adequately informed and protected against unfair or misleading marketing techniques. 
 Sir Geoffrey said that fair trading is good business and I would echo that now. He noted that the first institutional innovation proposed in the legislation was the appointment of a Director General of Fair Trading and went on to draw parallels with other countries. In part, the proposals were based on the federal cartel office in West Germany. At the time, most people would have agreed that the model chosen was probably the most appropriate. Broadly speaking, the office of Director General of Fair Trading has served us well during the years. There is no political argument about that in Committee, but we, the Government and consumer organisations share the view that that legislation needs revisiting. We must take the opportunity and I am pleased that we are doing so now. 
 The new Office of Fair Trading should be properly established in a corporate sense, with properly set out responsibilities and duties. It should be accountable and its board should cover a wide range of skills, interests and backgrounds. 
 There are three broad themes to which we shall keep returning. The first is effectiveness: to what extent the Government proposals are not mere rhetoric but will make a real difference to people's lives. Secondly, we will consider closely whether there are unjustifiable burdens on business. Thirdly, we will ask whether resources are available to back up some of the new powers. That applies as much to the Office of Fair Trading—as it will continue to be called—as to the trading standards departments of individual local councils. 
 We welcome the clause. It is eminently sensibly and seems to be supported by all sections of opinion in the consumer world.

Vincent Cable: As the hon. Member for Eastbourne suggested, this is an appropriate time to raise some broad themes about the Bill and I will pick up a couple of phrases that the Under-Secretary used in emphasising what she saw as important: the depersonalisation of decisions and the independence
 of the OFT. That independence in day-to-day decisions is probably the most important change that the Bill will bring about. I will comment on that, particularly on how independence can and should be entrenched through political accountability. We could have that debate now or on schedule 1 stand part, but this time seems as appropriate as any.
 As I said on Second Reading, the Government are right to move in the direction of independence. Otherwise, there would always be a conflict between a Minister's party role and role as a member of the Government, in which he or she must consider the broader interest. There have been several cases in which such a conflict has occurred. None the less, we should not be too modest or humble when debating whether politically sensitive decisions should always be handed over to quangos that are politically independent. There are dangers in that route too. We must strike exactly the right balance. 
 The system that has operated until now has a lot to commend it. No one would ever suggest that there is anything remotely corrupt in the British system under this Government, or their predecessor. It is a very honest system. Ministers have no personal interests in the decisions that they make. Equally, Government intervention in merger decisions in recent years has been minimal. Ministers have used their powers sparingly, such as the Under-Secretary's predecessor but two in the case of the takeover of regional electricity companies. Important political issues needed to be addressed and Ministers were right to use their political role in that capacity. 
 We need something in the Bill that retains political accountability, even though it makes the OFT independent of political direction on a day-to-day basis. We must be careful not to throw out the baby of accountability with the bathwater of unnecessary interference. Achieving that balance will be difficult. We could produce a situation that is worse than the present one if the OFT simply becomes a politically unaccountable quango in which people are appointed by Ministers and feel that they have little accountability to Parliament. 
 Those of us who have been in Whitehall know how the system operates. The permanent secretary has a draw, which may not be specifically labelled, containing a list of the great and good. When a big public appointment needs to be made, it is got out and dusted. The familiar suspects appear and the usual compliments, such as ''safe pair of hands'', ''doesn't ruffle feathers'', ''is well liked in the City'' are available. Assuming those qualifications are met, the suitable appointment is made. There was a wonderful example yesterday, with the appointment to look at corporate governance, which was a typical quango appointment.

Nigel Waterson: The hon. Gentleman will be able to confirm that the Government offered that bed of nails to several people with substantial corporate backgrounds before the final appointment was made.

Vincent Cable: Indeed. It was a somewhat embarrassing episode. They may have ended up with someone who satisfies no one, certainly not the small investors. That example demonstrates the difficulty of appointments to quangos. One can satisfy the Nolan conditions—they may be people of total probity—but it is hard to get people who are technically competent, with experience of the real world, yet also politically sensitive enough, although not in a party way, to understand the impact of their decisions on real people. That is why we need to have measures in parallel with the Bill that build in political accountability.
 I should like to take the Under-Secretary back to the question that I asked on Second Reading. She did not answer it then but she was pressed to answer many questions in her summing up. Do the Government have it in mind to introduce in parallel with this legislation, measures to strengthen political accountability, comparable to those that applied in the Bank of England Act 1998. I sat on the Standing Committee that considered that measure when I first came into the House. The Act reflected great credit on the Government, particularly on the Chancellor. It is one of their big success stories. It said nothing about political independence or accountability. During its passage, the Chancellor made a statement in the House to the effect that he would try to ensure, by writing to the chairman of the Treasury Select Committee, that appointments to the Bank of England Monetary Policy Committee would be interviewed after he had nominated them and that they would regularly appear before the Select Committee to give an account of their work. He subsequently wrote a letter to Lord Radice explaining what he wanted to secure. There was all-party agreement that it was a good way to proceed and that system was highly successful. Will the Under-Secretary confirm whether she and the Secretary of State envisage something comparable, which I would find enormously reassuring? It is not a party point; as I said earlier, it is one of the Government's success stories from the previous Parliament, on which they should try to build. 
 Reflecting on that successful experience, it is clear that having members of the Monetary Policy Committee—in this case, members of the OFT—subject to confirmatory hearings in the House has many advantages. Responding to Members rather than just Ministers entrenches their sense of independence. Sir Edward George is perceived very differently from Mr. Bridgeman, who was fired in dubious circumstances by the Secretary of State's predecessor. The fact that Sir Edward is accountable to the House has strengthened his position, conferred credibility and made his independence much more real. 
 The fact that members of the Monetary Policy Committee—and, I hope, of the OFT—are subject to that scrutiny toughens them up. Hon. Members gave some members of the MPC a real going over. I recall Sushil Wadhwani being roundly criticised for plagiarising his statement to the Select Committee. Probably in response, he subsequently proved himself to be an exceptionally independent and hardworking member of the MPC who has cut swathes through the 
 policy debate. Having people on the OFT publicly exposed, identified and criticised in that way would add greatly to its status. I hope that the Government does not view the OFT as a quango that can be packed with people whom Ministers regard as safe and comfortable rather than with people of real standing who can stand up in public and be accountable to this House. The latter approach would do wonders for the Government's credibility.

John Pugh: My hon. Friend tabled an amendment that was not selected. Does he agree that, as the OFT will take difficult and controversial decisions in future, the Under-Secretary should explain why she is not interested in having the protection that prior scrutiny will give to her or any future Minister's name?

Vincent Cable: Yes, my hon. Friend makes a helpful point in highlighting one of two ways of resolving the problem. The first—the amendment that I tabled on the subject was late, so I am not criticising the selection process—could be brought up again later. It is to entrench in the Bill a provision that mandates the prior scrutiny of OFT members. The Treasury Select Committee argues that its own powers should be entrenched in legislation. The other way would be for the Under-Secretary to state, today or later, that the Government want to learn from good experiences with the Bank of England legislation and try to introduce something comparable to that model—on a voluntary basis as negotiated with the Chairman of the Select Committee. I view that as a less satisfactory solution, but it would still be a big step forward. I hope that the hon. Lady will provide us with some hope that the Government are thinking along those lines.

Harry Barnes: My main and major contact with the Director General of Fair Trading in the current OFT came about because of a merger that led to a loss of 700 jobs in my constituency. I was trying to encourage the director general and the Secretary of State to refer the matter to the Competition Commission. It was a major issue, so I had relatively easy access to the Secretary of State, the Government Office for the East Midlands, the Office of Fair Trading and its director. It was difficult because the merger took place during the summer recess, but eventually it could be pursued through the avenues of the House.
 My interest is in a Back Bencher's avenues of access to the board proposed in the Bill. The issues of accountability raised by the hon. Member for Twickenham are also relevant and important. 
 Clause 2 transfers the functions of the director general to the new OFT. Clauses 5 onwards deal with ''General functions of OFT''. Several points are presented, but they do not connect with the mergers rule because we have not yet reached the mergers section of the Bill. Presumably, those matters are also transferred in accordance with clause 2. I am trying to find my way around this highly complex Bill. Later on, it becomes clear that one section can be understood only with reference to another, which then refers us to yet another. It would be helpful to have some clarity from the start.

Jonathan Djanogly: I welcome the board and the new balance of power that it represents for decision taking. Hopefully, a wider range of expertise will be brought into play. It is certainly an improvement on the position whereby power rests in the hands of one individual, the director general.
 Legitimate questions arise. The hon. Member for Twickenham anticipated my approach, although I look at it from a slightly different angle. It boils down to questions of accountability. I shall not deal with the specifics of schedule 1 until later, but I want to speak about the nature of the board. The Bill does not mention—I will be corrected if I am wrong—the concept of a board. I do not know why and look forward to hearing the Under-Secretary's explanation. It might be because the provisions refer to the investigations that the full board or committees of the board can undertake, so the term ''OFT'' is used. On the other hand, it could be due to the Government's approach to corporate governance and accountability. 
 The Bill presents standard quango-type arrangements rather than a board with more corporate-governance-type arrangements. I wonder whether we might be missing an opportunity to merge the best in the fast-moving field of corporate governance and best practice with modern governmental practice. The Government have clearly opted for the old quango approach, as will become clear in various ways as we proceed through the Bill. I shall go through the specifics later, but we are missing an opportunity. I shall argue for greater transparency through better and more effective corporate governance. The bottom line is that the OFT is not a company, but a statutory corporation, so it will be a non-ministerial department staffed by civil servants. 
 To that extent, there will, I believe, be a requirement for parliamentary political accountability. That point was picked up by the CBI, which has called for parliamentary approval by the Trade and Industry Committee of appointments to the board. I know that this issue relates to starred amendments and will not be debated specifically, but I should be interested to hear where the Government stand on that power being attributed to that Select Committee. I believe that other Committees are discussing this sort of issue. 
 There could be an opportunity for a company-type corporate governance system, with the Trade and Industry Committee or, indeed, the Government being able to call in specific issues. That would turn the way in which the system works on its head. The current position is that the Government will make the appointments, and the Chairman, I think, can have a say in some cases, or there is a need to refer to him. However, the OFT could be allowed to run itself, with others—whether they be the Trade and Industry Committee or the Government—having the right to call in decisions or decisions on appointments. Those are a few thoughts on the wider issues, and I should be interested to hear the Government's opinion.

John Pugh: Four ministerial appointments are certainly better than one, but the whole character of the Bill will necessarily lead to more decisions and more activity by the OFT, and more controversy, on which will hinge appreciable amounts of finance.
 It has been suggested that prior scrutiny by the Trade and Industry Committee would be a good thing, and everyone can see that that would have merits. If such scrutiny were included in the legislation, what would be the downside? As far as I can see, there would only be an upside. When controversial decisions that gave rise to public disquiet or allegations of financial impropriety were made, any future Minister could always answer that the appointment was made not by them, but by a House of Commons Select Committee, or at any rate was confirmed by the Committee. That would be a defence for any Minister at any time in future. I simply repeat my question; what would be the downside?

Mark Field: Like the hon. Member for Southport (Dr. Pugh), I have concerns about the controversy that is likely to arise, and I should like to have a general assurance from the Under-Secretary. The Government have made a big song and dance about the Bill and the idea that it is somehow out of the realms of party politics. My concern is that, although that is the aim, there is a real risk that by appointing figures who are controversial or who have had links with particular political parties, businesses or interest groups, there will be even more controversy, even though there will not be as strong a direct link. In fact, issues may come into play that show that there are strong links.
 It has been said that the current system works fairly well. I should like to have some guidance as to why the Government believe it so important to move away from that system—which places more direct accountability on the shoulders of particular DTI Ministers—and why it is desirable to move away from the political input that the DTI has had in this area.

Melanie Johnson: I welcome the contributions that hon. Members have made to the debate, and the support that has been expressed for various aspects of the provision, including the establishment on new terms of the Office of Fair Trading and the institution of a board. It was suggested that the OFT board should have four or five members. It might be helpful if I specify that we are looking at five to seven members.
 Several hon. Members raised the issue of accountability; we agree that it is probably the most important issue. Accountability is necessary, not least from the point of view of the House. The OFT will be accountable to the Secretary of State, Parliament and the public. The chairman of the OFT could be summoned by Select Committees. Indeed, I am delighted that the Trade and Industry Committee already takes an active role in scrutinising the work of the OFT and the Competition Commission. Its report on the OFT's consumer work in 2000 influenced the OFT's consequent work on consumer credit, for example. I understand that the Trade and Industry Committee will talk to the OFT and the Competition Commission on 23 April. 
 On the wider points about accountability, we believe that the OFT should follow the general principles of good governance of all bodies corporate. The working arrangements are for the OFT board to agree but we expect them to fit into the general thrust of transparency, openness and accountability set out in the Bill. We will talk a lot about transparency, openness and accountability because those qualities are vital. Indeed, we believe that making the changes will enhance rather than detract from them. 
 Clauses 3 and 4 require the publication of an annual plan for the year ahead, as well as an annual report. The OFT must consult when preparing its annual plan which, with the annual report, are to be laid in Parliament. The OFT's performance will be monitored against objectives, both by Parliament and the public. The OFT needs to keep the public informed of its work and, under clause 4, to publish other reports of its work.

Vincent Cable: Will the Minister clarify her definition of accountability? She has acknowledged the role of the Trade and Industry Committee. Why should not the Committee have the same scrutiny role on appointments that the Treasury Committee and the Monetary Policy Committee have, as requested by the Chancellor?

Melanie Johnson: Unlike the Monetary Policy Committee, the OFT is and will remain a Department; indeed, it is part of the Executive. It is not normal practice for members of the Executive branch to be appointed or approved by Parliament. I cannot think of precedents for that and it would be an unusual step for us to take. However, as I said, we welcome the interest taken by the Trade and Industry Committee. The chairman of the OFT will be called to give an account of its work and to discuss regularly such matters as the annual plan and the annual report with the Trade and Industry Committee. Those are vital elements in the process. I understand the point of the hon. Member for Twickenham on possible parallels with the Monetary Policy Committee, but I hope that he appreciates that there are also significant differences with that Committee.

Jonathan Djanogly: On the OFT being part of the Executive, surely the Minister appreciates that we are talking about individuals who are pulled out of business and various walks of life. We are talking about calling to account not Ministers, but a very different kettle of fish.

Melanie Johnson: The hon. Gentleman is right; we hope to draw board members from business and to bring with them a range of valuable outside experience and perspective. The board will be an important part of the function of the OFT. However, there are not parallels between members of an organisation or board acting in that capacity in relation, in an executive function, to other parallel parts of Government, effectively Government Departments; there is no read-across where Select Committees vet, have hearings on or appoint members of other parallel board arrangements—

John Pugh: Will the Minister give way?

Derek Conway: Before I call the hon. Gentleman, I remind the Committee that schedule 1 deals in considerable detail with the waters we are now getting into. It would be helpful if hon. Members did not stray into the next matter for consideration.

John Pugh: Is not there a paradox, in that the Bill sets up a board that is intended to be independent of the Secretary of State, but cannot be scrutinised because it is part of the Executive? Surely it cannot be both a truly substantial body, by itself independent of the Secretary of State, and not subject to scrutiny because it is under the Secretary of State.

Melanie Johnson: I am grateful to the hon. Gentleman for making that point. The board's independence is very important so that the OFT can regulate its own procedures—quorum, voting, committees and so on—and have flexible arrangements enabling it to take quick decisions when necessary. It is important, too, that there is no question of political interference. I am grateful for the remarks made by the hon. Member for Twickenham about the standing of the OFT and the fact that there is no question of it being interfered with. As the hon. Gentleman said, it is an honest system that has been sparingly used. None the less, there are risks in having a political dimension.
 Taking the step of distancing politicians from the decisions that need to be made about competition on competition grounds is important; we would lose a lot were we to argue our way out of it. I appreciate that there is a desire in the House, and the Committee, to maintain accountability, which is why I stressed that the measures that deliver enhance accountability over the existing arrangements. I hope that what I have said will reassure my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) about the avenues of access, many of which will remain. There will be discussions with the Department on such issues and greater scope for parliamentary engagement. As in the past, there will be the usual scope for Members of Parliament to contact the Office of Fair Trading to raise issues and take matters forward on behalf of their constituents. 
 On the body corporate and the statutory board, it is a matter of terminology; there will be a board and it will be a legal entity. The OFT and the board are one and the same entity, so the reference to a board is unnecessary in the Bill. 
 I welcome the focus of the hon. Member for Eastbourne on important issues such as effectiveness, the burdens on business and the resources available. I look forward to further opportunities to debate those matters in the Bill. 
 Question put and agreed to. 
 Clause 1 ordered to stand part of the Bill.

Schedule 1 - The Office of Fair Trading

Nigel Waterson: I beg to move amendment No. 1, in page 182, line 6, at end insert
'of which at least 50 per cent. will be currently active in industry or commerce at the time of their appointment'.
 I hope that what we have in mind in amendment No. 1 is clear; it leads directly from our previous debate. I am sure that all members of the Committee are as keen as we are that the new board should have considerable standing. I mention in passing that we broadly share the concerns of the hon. Member for Twickenham, who has tabled a starred amendment on parliamentary scrutiny. He has had his bite of that cherry and made his points well. I will move on rapidly, before I am ruled out of order. 
 The point of my amendment is that we do not want as appointees to those important positions armchair warriors, retired civil servants, long-retired business men, those with narrow experience or those who are no longer involved in the daily cut and thrust. That is why the amendment states that at least 50 per cent. of appointees should be active in industry or commerce at the time of their appointment. If the Under-Secretary suggests that there may be up to seven such appointees, I will leave it to those who are cleverer than me to work out how the 50 per cent. would work. 
 The OFT, as it is newly constituted, will have some sweeping powers and responsibilities and is in a position to have a dramatic effect on individual businesses and business sectors throughout the economy. People should therefore be appointed who are, in some measure, engaged in hands-on industrial or commercial activity at the time of their appointment. The other 50 per cent. could be appointed from the categories that I mentioned, or could have competition experience, as the hon. Lady suggested. 
 The OFT should not be made up wholly of people who represent some narrow consumer or competition interest. There may be some role for one or more academics, but people with hands-on, real world experience are important in this context. Although I hesitate to pray in aid regularly, I do so with the stated views of the former Secretary of State who is now the Secretary of State for Transport, Local Government and the Regions. In May 2000, he stated in a Department of Trade and Industry press release: 
''The new Authority will give greater transparency and accountability to the OFT. More board members will give a wider range of expertise to the organisation, rather than executive power resting with one person. This will give businesses and consumers a stronger voice at the heart of the OFT.''
 Our amendment merely seeks to put into effect the stated intention of the previous Secretary of State to give businesses—in this instance— 
''a stronger voice at the heart of the OFT.''
 The Under-Secretary may be about to tell us that the policy has changed in the meantime. If so, I can certainly understand the desire of any Minister to distance themselves from the record of the right hon. Gentleman in any of his previous incarnations. However, his sentiment seems eminently sensible. I understand that Mr. Bridgeman's successor has set up a four-member advisory panel that meets monthly to discuss policy, strategy, research and communication. It includes a former editor of the Financial Times and a leading competition academic and author. The OFT has been at pains to make it clear that the body is strictly advisory. It issued a press release that stated: 
''it is not a shadow board or precursor to the statutory board''.
 I assume that one can surmise from that that the composition of the board would be different from that of the advisory panel. It would help to have the Under-Secretary's more detailed thinking on that, which is why we tabled the amendment. However, at the end of the day, the amendment should present no difficulties if the hon. Lady still agrees with the views of the previous Secretary of State.

Vincent Cable: I agree with the spirit of the amendment, but I am not sure whether 50 per cent. is necessarily the correct proportion or whether we should define industry and commerce in a narrow sense. I agree with the spirit for two reasons, which have already been given by the hon. Member for Eastbourne. First, the people who sit on the board of the OFT will be powerful people. They will make major decisions that directly affect the lives of tens or hundreds of thousands of people who are affected by merger decisions, as well as millions of consumers. Secondly, it is important that the OFT does not become just a parking place for ex-civil servants. I do not mean any disrespect to ex-civil servants, as they are undoubtedly admirable people, but such a situation would be wrong. I was slightly worried by the tone of the Under-Secretary's reply on clause 1, in which she seemed to emphasise the closeness of the OFT to the spirit and structure of the civil service. If the OFT develops in that way, it will not be right.
 Following the line of argument of the hon. Member for Eastbourne, OFT members will need to be wide in their capabilities and several qualifications strike me as necessary. They must have some understanding of the real world, and I hope that when the hon. Gentleman specified including 50 per cent. from industry, he was not talking only about those from the employers' side. Ex-trades unionists with experience of industry may have something to contribute and if he meant to include them, I would be much closer to his point of view. People who have an understanding of industrial and commercial issues from direct experience would be desirable. One should not be unduly prescriptive about that, and financial and economic journalists are often some of the best-qualified people to make such judgments. Therefore, a first requirement should be an understanding of the world of commerce and industry. 
 However, that is not all. Members of the OFT will have to have a good understanding of industrial economics, which is a highly technical subject. It is important to follow what has happened in the United States Department of Justice and the European Commission. Some thinking has become very sophisticated, in terms of both legal and economic principles. I shall not bore the Committee with an hour-long dissertation on the Hirschman index and other hot topics in the competition policy world, but members of the OFT will have to be familiar with demanding literature on such subjects. They must be familiar with business and understand industrial economics. 
 OFT members must also have a political feel—they must be not politicians, but people who understand that when a merger decision is taken it affects many people down the supply chain. Even though the terms of reference will be narrowly drawn to encompass the competitive effects rather than the wider national interest, OFT members must be sensitive to the problem. They also need to understand the way in which decisions will affect financial markets, so we are talking about people who are qualified in a wide variety of subjects. 
 The amendment is useful because it flags up the fact that the OFT members are important and must be able to understand both the academic and practical aspects of complex business decisions. They are unlikely to be found in great numbers in the civil service machinery, although some extremely able civil servants may well come forward. I support the amendment in principle, but I am open to suggestions about how it could be couched in slightly different language if that helps.

Ken Purchase: The hon. Member for Twickenham rehearsed the arguments as to why we should not put off the amendment. This is the age-old problem of seeking people to serve on such bodies who have a sufficiently wide experience and knowledge to make a significant contribution. I have long given up the notion that there is a body of independent people who can express a value-free opinion without let or hindrance and put aside all other interests to arrive at a fair and proper decision. My experience is that such people are in exceedingly short supply and it is chasing an illusion to believe that we could people a body with such super-beings, who do not exist.
 The hon. Gentleman also gave us reason to recognise that his own amendment, which would mean that such a person would be interrogated by the Trade and Industry Committee, would also be a bad idea. You wisely did not select the amendment, Mr. Conway. The hon. Gentleman has told us from his wide experience and knowledge of the matter exactly what would happen. It would be worse than an interrogation. People would be put off being on the committee if they had to face the barrage of questions that the hon. Gentleman would ask as a member of the Select Committee. 
 There is no ready formula by which to appoint people to these important bodies. When the chairman or chairwoman is chosen, after a quite exhaustive procedure, not just a dusting down of the great and the good names that might appear from time to time, that person must be given some credit. He or she must be able to choose and to liaise with the Secretary of State to get a balanced and proper set of people to serve on the committee. The idea that 50 per cent. should represent one interest seems perfectly reasonable on the surface. Of course, we need people who understand what they are doing and have a background in the areas in which they are expected to make important decisions. They will not come with an independence of mind, however. Like most of us in this Room, they will come with bags and baggage that will preoccupy them and affect their decisions. 
 It is best left to the Secretary of State and the chairman or chairwoman of this committee to decide who may serve, recognising that we all have our own interests to serve, that we can call upon expert opinion, that we can ask for written submissions and that the body involved can take evidence from as wide a range of people as it wishes in examining any issue that is referred to it. We should therefore reject the amendment on the grounds that we could never satisfy all the different sectors that would want to be represented at this level, but should leave it to the common sense and good judgment of whoever is appointed as chair, in liaison with the Secretary of State.

Jonathan Djanogly: I certainly support the amendment, although I should like to turn it around and ask, if the Government are minded to turn this down—I know that this will not happen—what would their policy be for appointing candidates to the board? It is worth speaking frankly. The concern is that this will become another way of appointing cronies. The Labour Government have packed the other place with cronies and they have packed quangos with cronies, so why should they not pack this board with them? It is a straightforward suggestion, but we deserve an indication from the Under-Secretary of the basis on which appointments will be made.

Harry Barnes: Perhaps the hon. Member for Eastbourne and the Under-Secretary could explain this to me. The amendment refers to those
''currently active in industry or commerce''.
 The hon. Member for Twickenham assumed that that would include trade unionists and people on the shop floor. While it might cover those who are working and employed in industry and commerce, would it cover trade union officials who were negotiating on behalf of those people and might have some expertise in those areas but were not on the payroll?

Mark Field: Does the hon. Gentleman regard a full-time shop steward who has spent the past 15 years as a political agitator as someone who is currently and actively involved in industry and commerce?

Harry Barnes: That is a question for the hon. Member for Eastbourne. He should clarify exactly who is covered.

Nigel Waterson: When I drafted the provision I was not thinking directly of trade unionists. As my hon. Friend the Member for Cities of London and Westminster suggests, one may stretch the phrase
''currently active in industry and commerce''
 a little too far. We do not want a quota system under which different groups have a certain number of positions. I am merely trying to underline the fact that the people involved should have real experience of the burdens on business that legislation can bring about, sometimes unintentionally.

Harry Barnes: An active shop steward working in a firm who represents people well is likely to have considerable useful experience to draw on. I do not know whether the Minister believes that that example
 is covered by the definition in the Bill. I was worried that the provision might be an effort to turn the appointments procedure into a gaffer's charter.

Melanie Johnson: Of course, I greatly hope that strong business candidates will apply to the OFT board because their experience and insight could be valuable. We shall run a fair and open competition to appoint members through Nolan procedures. We are hoping to recruit people with a range of skills, expertise and abilities that are relevant to competition or consumer protection. I do not want to be drawn into the debate among hon. Members on both sides of the Committee about the exact backgrounds from which people will be drawn. I accept all the arguments about the wide skills that are necessary for this important job. A relevant set of skills and abilities will need to be deployed on behalf of the OFT—not least common sense and good judgment, the rarest of qualities in my experience and often difficult to obtain.
 At this stage, it cannot be right to appoint half from one background and half from another, thereby imposing a quota. Opposition Members, particularly the hon. Member for Eastbourne, are opposed to the imposition of quotas. We shall appoint the best people through the recruitment process, and I assure the Committee that we want to secure people with business experience. I share the overall thrust of the amendment—though not the 50 per cent.—but, for precisely the reasons mentioned by the hon. Member for Twickenham when he listed all the potentially relevant skills, it is not the best way to achieve the objective. We shall leave it to those appointed to secure the right balance and appoint people of high quality.

Vincent Cable: May I clarify one point that is not clear from the debate so far? Does the Minister agree that the role of the board is to provide a strategic overview, which will then guide the director general, or will individual board members vote on specific executive decisions on mergers? Can she better define the nature of the job so that we can better judge what sort of representative would be most appropriate?

Melanie Johnson: We certainly envisage the board looking at strategic functions—a key element of the way in which the board should operate. I can confirm that the advisory panel arrangements are a precursor and that members remain no more than advisory at present. They will contribute to the OFT role through the new arrangements. Some members may join the new board, but the panel will conclude its arrangements when the board comes into being.

Nigel Waterson: I want to be clear about this matter. The Minister described the advisory panel, perhaps not wholly accurately, as a precursor. The quotation that I read out seemed to suggest that the director general was making a clear distinction between the role of the advisory panel and the likely future role of the board. Perhaps I was reading too much into it, but that suggests to me that a different sort of person from those currently on the advisory panel would be considered to sit on the board. Will the Minister please clarify the matter?

Melanie Johnson: It depends in what sense I mean the word ''precursor''. We can disagree about what that word means, but the panel is an advisory panel that acts in an advisory capacity on policy matters. It might help if I run through the sort of decisions that we envisage the board will take. We are talking not about day-to-day decisions but about high-level decisions, market studies and cases of strategic significance; about approving the annual plan, the annual report, financial statements, the budget, negotiating strategy, matters such as the service delivery agreement and major or unusual capital projects; about considering the OFT's communications strategy and approving the OFT pay and human resources issues, all at a high strategic level. The board will not be involved in operational, day-to-day matters.

Nigel Waterson: I am grateful to the Minister for that explanation. As she guessed, this is a probing amendment. I am still not wholly clear about whether the advisory panel will continue in parallel with the board or be subsumed in it.

Melanie Johnson: Neither will occur. The panel will cease to exist on the institution of the board arrangements, or possibly prior to that. The advisory panel will not continue when the board is established.

Nigel Waterson: I am grateful to the Minister for that clarification and for the clear indication that business will have a voice on the board. As I said in response to the hon. Member for North-East Derbyshire, I do not want a quota system. I merely wanted to flag up the fact that business wants to be represented and to know that people on the board have a good business track record and have had to wrestle with some of the issues from the other side of the equation. If the OFT is to work, it must carry out its complex new tasks and duties effectively and successfully. It must be sensitive to the needs of business and earn its respect and support, or it will not be as successful as it should be.
 Whether or not the provision is part of a gaffer's charter in the eyes of the hon. Member for North-East Derbyshire—he is irredeemably and lovably old Labour on these occasions—we shall keep returning to the major theme that we are eager that the Bill should not heap extra burdens on business, even if that is unintentional. 
 I am happy that business is to be represented. I read in my newspaper today that Mr. Bernie Ecclestone is considering making further contributions to the Labour party. Given the roaring success of his last contribution, which got him everything he wanted and the contribution returned, I do not entirely blame him. He might be the sort of business man with a major track record who could be considered for a shortlist. 
 I beg to ask to leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Question proposed, That this schedule be the First schedule to the Bill.

Jonathan Djanogly: I want to speak in this debate as there are questions relating to specific provisions to which I want the Minister to reply.
 First, the Bill refers to there being 
''no fewer than four . . . members''
 of the board. Where did that number come from? Why not have a higher number—10, for example? That may seem a strange request, but as members of the board are to be political appointments, the fewer the members, the greater the possibility of political influence. That is why I was surprised by the low number. The chairman is to be consulted only on appointments, which means that, depending on the nature of the chairman chosen, there is room for political input. We should completely remove the Government from the appointment process. 
 In his starred amendment, to which we shall come, the hon. Member for Twickenham proposes prior scrutiny by the Trade and Industry Committee. I disagree with that approach. Why should anyone get involved in the first place? There should instead be a right of recall. In other words, if the Government or the Trade and Industry Committee disagreed with a proposal from the board, they could call it in. With that exception, why not let the OFT rule itself, free from maximum political interference? I suggest a system like that of corporate governance, with an executive and a non-executive board, where the non-executives have the right to nominate suggestions but not to make appointments, which would be considered and voted on by the whole board, subject perhaps to veto by the Government or Select Committee. 
 There is talk of a maximum five-year term but no minimum term. I understand the practicalities of that, although I would be interested to know the minimum period that the Government are considering. Again, there is concern that many short-term appointments would increase the Government's leverage on members' replacement, re-adoption and terms of employment. Although I would not speak against a term of five years, I would want to be reassured that short-term appointments to the board would not habitually be made. 
 The committees in the schedule also need to be considered. For example, can they be given the authority to make decisions or only recommendations to the main board? Would decision making by the board require consultation with the Secretary of State? Paragraph 11 would, effectively, enable the OFT to allow a committee to do anything that the main board can do, so clarification is required on how much power the committees will have. How important does an issue have to be before it needs to be considered by the whole board rather than a committee of the board? If committees can make decisions rather than recommendations to the main board, how will the main board supervise the operations of the committee? That is particularly important because the schedule provides for non-members of the main board to be appointed to committees, which leads to questions such as how appointments to committees are to be made. The issue of committees having the same power as the main board is surely just as important as how appointments to the main board are made—yet the schedule does not address it. I would be grateful for the Minister's consideration of those points.

Melanie Johnson: Perhaps it would be helpful, in answer to some of the points made by the hon.
 Member for Huntingdon, if I set out how we see the schedule. I will also pick up some of the other points that were made.
 The schedule sets out fundamental terms by which the OFT must operate in order to ensure the accountability and transparency of this public body. The schedule stipulates that the OFT shall consist of a chairman and, as the hon. Gentleman said, a board of at least four other members. As I said earlier, our thinking is in the order of five to seven members. My right hon. Friend the Secretary of State will appoint the chairman and, in consultation with the chairman, the board members. That process will be conducted according to the principles of open competition and the Nolan procedures. 
 John Vickers, the current Director General of Fair Trading, will be the first OFT chairman for the remainder of his term, in line with what was agreed when he was appointed. The terms of appointment will be for a maximum of five years, as the hon. Gentleman said, and are renewable. I do not think that we should stipulate a minimum term in legislation. That would provide too little flexibility, and judging by the hon. Gentleman's remarks, I think that he understands the need for flexibility. Indeed, it is sometimes attractive—especially initially, when one is making a number of appointments—not to appoint everyone for the same time frame, simply to ensure that not all future appointments are made at the same time and that there is continuity in the organisation. It would be unfortunate if we stated a minimum time in legislation.

Mark Field: We have talked about a minimum term, and paragraph 3(1) of the schedule sets out the maximum term of five years. Has the Minister thought about reappointment for second or subsequent terms?

Melanie Johnson: The terms of appointment are certainly renewable. We have not put a limit on appointment, although various guidelines about the operation of Nolan appointments may put a ceiling on it. At the moment, however, nothing in the Bill does that, and we envisage that the terms of appointment will be renewable.
 It is fair to say that the presumption will be for people to serve a full term. With initial appointments, however, there may be different reasons for considering the terms of appointment. For example, if a brilliant candidate were prepared to accept only a term of three years, which might well be the case, we might want to have flexibility built in. That would ensure that we could harness the skills of someone who was entirely appropriate and had much to offer the organisation and operations of the OFT, but who would not necessarily want to commit to a full five-year term and would be uncomfortable if that were the only possibility.

John Pugh: My question is on a small matter of detail that has not been covered in the Minister's remarks. Is it expected that board members, as opposed to the chairman, will be involved in executive decisions on major mergers, or is their job purely strategic?

Melanie Johnson: Their job is strategic, but all the powers exist formally at board level and will be delegated for operational purposes to the committees and the rest of the structure, to which the hon. Member for Huntingdon referred. Safeguarding OFT independence has also been raised, and it is important to note that, once appointed, members can be removed only by the Secretary of State on specific grounds of incapacity or misbehaviour. There would be no other reason for which board members could be removed, once appointed.
 The staff will be civil servants working in a non-ministerial Government Department that is a Crown body. The number of civil servants, and their terms and conditions of service, will need to be approved by my right hon. Friend the Prime Minister, the Minister for the Civil Service. The schedule allows for the OFT to establish committees and advisory bodies, and to regulate its own ways of working. It must, however, consult the Secretary of State on its procedures for dealing with conflicts of interest—clearly a difficult and important area—so that Ministers can ensure that proper procedures are in place. Indeed, a general problem as a result of potential conflicts of interest concerns the ability to appoint people who will be able to operate in key areas. 
 In line with the independence principle, the schedule gives the OFT a general power to do anything that will facilitate or assist the performance of its functions. Obviously, that is constrained elsewhere in the Bill.

Jonathan Djanogly: We have not touched on decision making. Would decisions be taken on the basis of a majority vote by the full board?

Melanie Johnson: As I said, it is for the OFT to regulate its own procedures, such as quorum voting arrangements and committees, in line with its independence. We do not want to interfere in those matters, and it would not be appropriate for the House or the Committee to do so for the reason that I gave; it is important that those arrangements reflect what the OFT needs in order to function effectively. I know that hon. Members are concerned about that.

Jonathan Djanogly: When the OFT publicises its decision, will dissenting opinions be laid out specifically, with reasons given as to why the dissenter is dissenting, as in a court judgment?

Melanie Johnson: That also is a matter for the OFT. I will take the hon. Gentleman's question away and consider whether I want to comment on it further. However, I believe at this stage that that is a matter for the OFT to consider under the arrangements that I have outlined this morning. As I said, the OFT will be constrained by other Acts and laws. Within the restrictions, however, the OFT is allowed to act as it needs to in order to fulfil its functions.
 Finally, the schedule lays down that the OFT, as an authority, may be subject to investigation under the Parliamentary Commissioner Act 1967, which specifies that its members are barred from sitting in this House or the Northern Ireland Assembly. Hon. Members therefore need not apply. The schedule sets out the framework within which the OFT will operate. It also sets important boundaries and confers equally 
 important powers and freedoms on the new organisation. That is in line with an authority that is an independent, but still accountable, transparent public body. 
 Question put and agreed to. 
 Schedule 1 agreed to.

Clause 2 - The director general of fair trading

Question proposed, That the clause stand part of the Bill.

Melanie Johnson: The clause will abolish the office of the Director General of Fair Trading and transfer his rights, property liabilities and functions to the new OFT that clause 1 creates. The Fair Trading Act 1973 established the statutory office of the DGFT, as the hon. Member for Eastbourne said. The office holds a wide range of consumer protection and competition powers, many of which are being reformed. In the light of those reforms, the Government believe that an individual should no longer hold the powers. We propose under clauses 1 and 2 to transfer the powers to a new statutory body with a board and a chairman. We already discussed the nature of the board and the expertise and knowledge that will inform its decisions.
 As I said, the current DGFT agrees with the decision. He was appointed in the full knowledge that that was the Government's intention. As was set out in Mr. Vickers' letter of appointment, we intend to appoint him as the first chairman of the OFT for the remainder of his existing term. He has stated publicly that he wants to serve only one term, which covers his time as DGFT and chairman. Mr. Vickers has appointed an advisory panel to act as a shadow board that will provide him with advice on the OFT strategy, new policy developments, areas of research and debate, market analysis and communication. The panel is strictly advisory and lacks the executive powers that the new OFT board will have under the Bill. Nevertheless, it has provided useful experience prior to the move to a full board. 
 The abolition of the office of DGFT and the move to a statutory authority will benefit business and consumers. The new authority will be independent and have a wide decision-making base. It will be fully accountable to Parliament and the public, and will be able to act swiftly and effectively. 
 Question put and agreed to. 
 Clause 2 ordered to stand part of the Bill.

Clause 3 - Annual plan

Question proposed, That the clause stand part of the Bill.

Melanie Johnson: The clause will oblige the OFT to publish an annual plan before each financial year. The plan will include a statement of the OFT's main objectives and priorities for the year ahead. The OFT must consult as it prepares the plan, and it must lay the
 published document before Parliament. As I said, this is an important means by which Parliament and the public can hold the OFT to account. It will have published objectives and priorities, which people will be expected to meet. Through the annual report provision in clause 4, the OFT will have to report on its progress against those objectives and priorities.

Nigel Waterson: We welcome the requirement to produce an annual plan. It will be beneficial for the OFT and help it to get its thoughts and priorities in order if it has to set broadly in context its plans and activities for the ensuing year and tell people what to expect, within and without the organisation. It will also help outside bodies, individuals and companies. We shall have more to say on annual reports.
 I hope that the Minister will comment on a small practical point. In the clause, as in other provisions in this part of the Bill, there is a requirement to consult before publishing the annual plan. The clause states that 
''the OFT shall consult such persons as it considers appropriate.'' 
That is a bit loose; is it really sensible to leave it to a body like the OFT to decide who it thinks appropriate to consult? We have not got our heads round a suitable amendment listing those who would be appropriate and there is always the worry of disappointing those who are not on such a list. The Government should look at that matter again as it must be in everyone's interest, including that of the OFT, if there is as wide a consultation as possible on the annual plan and on its general activities. Too often, bodies regard consultation as a tiresome formality, and I hope that the OFT will not take that view. However, if the Minister had some thoughts on how the provision could be tightened up, they would be welcome.

Melanie Johnson: We deliberately left the matter open to reflect the fact that things enshrined in primary legislation are remarkably difficult to change. As the hon. Gentleman said, it might be a while before there is another Bill that allows the flexibility to change something that is already on the statute book. Were we to specify people whom the OFT should consult, we might rapidly find ourselves with an exhaustive list, which would be dangerous. Such lists are seldom exhaustive, although they are frequently exhausting in Committee. On the grounds of future flexibility and because there may be unforeseeable developments, we would not want any further specification.
 I entirely accept the hon. Gentleman's point that there may be an interest in who the OFT plans to consult, but it is part of its accountability that it will have to explain who it is consulting and why. I am sure that representations will be made by bodies or persons who are not involved in the process but think they should be, and by the House and its Committees in deciding whether consultation has been appropriate. 
 Question accordingly agreed to. 
 Clause 3 ordered to stand part of the Bill.

Clause 4 - Annual and other reports

Nigel Waterson: I beg to move amendment No. 3, in page 2, line 24, at end insert—
'(c) a detailed summary of OFT decisions and investigations over the preceding year'.

Derek Conway: With this we may take the following amendments: No. 4, in page 2, line 24, at end insert—
'(d) an assessment of the additional costs to business of the exercise of its functions.'.
 No. 2, in page 2, line 26, at end insert— 
'(3A) The Government will arrange a debate in each House of Parliament on the annual report within three months of its publication'.

Nigel Waterson: We are really steaming through the Bill, Mr. Conway. I hope that the amendments' intent is obvious, but for the avoidance of doubt I shall go through them in a little more detail.
 We welcome the production of annual reports by the OFT, including the annual report, but there should be more prescription of what it should contain. Amendment No. 3 specifies that it should include a summary of OFT decisions and investigations in the preceding year; that, for all I know, is the intention, anyway. As the OFT builds up a catalogue of past decisions and investigations, it helps to have such a record, as it tells people in the outside world how it approaches certain situations and about its powers and functions. I hope that such matters will be part of the report. 
 Amendment No. 4 makes the point, wholly unexceptionally, that the report should contain an assessment of any additional burdens on business because of the exercise of the functions. Again, I shall come back to that in a moment. 
 I said on Second Reading—I have not changed my mind since—that it stretches credulity that the regulatory impact assessment report on the competition and consumer protection measures in the Bill suggests that there will be no extra cost to business. In any event, the Bill should oblige the OFT in its ongoing work to apply its mind, at least annually—I would hope that it would do so every day or week—to the effect, burden and cost on business that its activities, particularly investigations, will cause. Again, we will return to that theme. 
 Amendment No. 2 concerns the theme of transparency. The Under-Secretary has said that the Government's aim is to have transparency and openness and we welcome those aspirations. Indeed, we welcome them so much that we intend to do our best to ensure that they are cemented into the final version of the Bill. It is right that there should be an annual report and that, as detailed in subsection (3), a copy should be laid before Parliament and arrangements made for it to be published. Amendment No. 2 asks only why, having had the report produced, laid before Parliament and then published, the Government should not also be under an obligation to arrange a debate. It seems sensible for the House to make time for a debate once a year on 
 the work of the OFT, particularly in its early life, and I hope that the Government will readily accede to that. 
 I return now in slightly more detail to amendments Nos. 3 and 4. It is important for there to be an annual survey of the decisions and investigations of the OFT, first of all by way of precedent. As it goes along, the OFT will be setting precedents and we all know that in the field in which it will be engaged precedents can be important in saving time and legal costs.

Tony McWalter: Does the hon. Gentleman envisage the report containing details of the investigations that have occurred even if no decisions have been made—in other words, incomplete investigations? That would be volatile and could put a company in the embarrassing situation of being reported as being investigated when no one has decided whether the grounds for the investigation are substantial.

Nigel Waterson: In the real world, the fact that a company or section of industry was being investigated would come out anyway. It is difficult to keep such matters quiet. I promise the hon. Gentleman that we will come to that matter later, and the potential effect that it would have on share prices will also have to be examined.
 There may be scope for movement and we are not in the business of prescribing every last detail. We hope that the people involved will be serious, well qualified and able to sort out their own procedures to a large extent. It may not be necessary to name individual companies, but it is important that people who have dealings or fear that they may have dealings with the OFT can look at how it has approached matters. As the OFT goes on, a growing body of precedent will grow up. The report should also show how the OFT is approaching the slightly dry tasks that we are assigning to them in this legislation. Perhaps above all, the report should show, I hope, a thread of consistency throughout its approach to different situations. 
 Those are all concerns that have been raised, in particular by the Confederation of British Industry in a briefing. The briefing starts by saying that it warmly welcomes clause 4 but thinks that the Government should go a step further in requiring a detailed summary of the decisions and investigations, as I have suggested. It makes the point that the European Commission's annual competition reports provide useful summaries of recent cases and that that model should be adopted here. It thinks that there is potential for the OFT's reports to be too broad and general in form and therefore not much help to businesses and their advisers. I would rely on the example of the European Commission's competition reports for that purpose. I have never practised in that area of law, but the issue is clearly one that people will study in advising companies about the situations already covered by the Director General of Fair Trading or by the European arrangements. 
 I envisage the reports being of similar benefit. They should not be the dry, glossy reports that Members of Parliament often receive, which are immediately consigned to the wastepaper bin or to a corner of the 
 office, never to be seen again. They should be real, living documents that companies, individuals and their legal and other advisers thumb through regularly. The CBI takes the view in its briefing document that a calculation of the costs should be imposed on business by OFT investigations over the preceding year. It states that such investigations 
''often impose huge costs and other burdens on business, both in terms of professional fees and also distraction of senior management from their core activities.''
 It goes on to point out that that is why the Government are now obliged to produce regulatory impact assessments to look into the likely extra burdens of proposed legislation on business. I fail to see why the OFT should be treated any differently. 
 In a nutshell, we are saying that the OFT should do its own annual regulatory impact assessment because in the long run that is healthy for its relationship with business and commerce. If the OFT starts out with an antagonistic attitude towards companies or some of the consumer situations in which it will be involved, that will not benefit the consumer, business or the OFT itself.

Tony McWalter: Does not the hon. Gentleman agree that while companies might sometimes have to incur expenditure to comply with the legislation, they may also gain immensely from the existence of fair trading, as unfair traders will be forced to amend their nefarious ways? To comply with the spirit of the hon. Gentleman's amendment would require not only an indication of the costs of compliance but of the benefits that accrue to companies as a result of fair competition.

Nigel Waterson: Human nature being what it is, it would be surprising if the OFT's annual report did not trumpet its achievements—or perceived achievements. I am sure that that will happen. As has happened recently, we will embark on investigations that do not come to anything. Business ultimately has to carry the can and to pick up the costs. It is an issue that worries the CBI and its members; as it says in its briefing, it is a question of not just the direct costs of hiring lawyers or accountants but of the indirect costs of management time being spent on something not related to the company's core business. All that should be considered.
 I do not know of it, but there may be some vast body of guidance that could be made available to the Committee on the rules for preparing regulatory impact assessments. I have expressed my scepticism about the guidance prepared for the Bill. It stretches credulity to say that it will place no extra burden on business. I would love to know how the Government reached that conclusion.

John Pugh: No one doubts that the clause is laudable, but I have a residual doubt about how practical and realistic the amendment is. Much of what the hon. Gentleman has spoken about touches on the opportunity cost to business, which is notoriously difficult to assess. Part of that cost would involve answering questions from the OFT about how much it
 had cost it in the first place, which would be another complication. Will the hon. Gentleman explain what method of assessment he favours? There is no point in tabling an amendment if it is not practical and realistic.

Nigel Waterson: That has put me on the spot. The short answer is no. The long answer is that it is not my task to produce criteria. I threw the Minister a lifeline: there must be a vast amount of guidance on how the regulatory impact assessments are produced for Bills such as this. It still amazes me that such a conclusion has been reached with regard to the Bill, but that is another issue. Something similar could be used as a guideline for the OFT. I hope and expect that the amendment will be accepted. If it is, I expect the OFT to set out its own guidelines. Rather than reinventing the wheel, however, it would be well advised to reach for that large tome, which must exist for the purposes of legislation. I suspect that even now it is working its way down Victoria street towards us.
 I reinforce what the Department of Trade and Industry says about the extra costs at all levels of the proposed legislation. Burdens on business have risen almost exponentially under the Government. It is estimated that an extra £15 billion of costs has been placed on business. In January, the Ernst and Young survey concluded that the UK economy does not aid entrepreneurial endeavour. Few of us have the findings of the 2001 UK Global Entrepreneurship Monitor far from our bedside table. It concludes that the UK continues to lag behind countries such as the United States, Australia and Mexico in overall entrepreneurial activity. 
 The British Chambers of Commerce produced the figure of £15 billion of red tape. I suspect that that is already out of date, as was reported in the Financial Times on 25 March. Even that figure does not include the financial cost of the national minimum wage, which I notice went up yesterday or today. The Institute of Directors has attacked the Government's promise to cut red tape and, in a survey, 93 per cent. of its members believed that the problem of excess bureaucracy had got worse. 
 The British Chambers of Commerce have produced their own burdens barometer, which contains a long and detailed list of all the legislation and regulation introduced by the Government that they say cause extra burdens on businesses. There is not only red tape, but extra taxes. The CBI has just come up with its latest figure on business tax under the Labour Government, which it says has risen by £5.8 billion a year. That is a considerable increase on the CBI's previous figure of £5 billion. The list of red tape measures goes on and on: trade union recognition; maternity leave; additional maternity leave; parental leave; time off for domestic grievance; the right to be accompanied in such matters; the part-time workers' directive; the minimum wage; stakeholder pensions; the Welfare Reform and Pensions Act 1999; and the working time directive.

Melanie Johnson: Is the hon. Gentleman saying that he would end all those provisions?

Nigel Waterson: That is a game that two can play: in this case, one Government Minister and one Opposition spokesman. We always get such a reply from as elevated a figure as the Prime Minister downwards. However, that is not the point. It is not for us to pick out individual provisions that we do not want or that we want to reverse. Ministers must accept the cumulative effect of all those measures. I regularly talk to the CBI and the Institute of Directors and they often have no quibbles with individual measures, such as those contained in the recent Employment Bill.
 The problem occurs when one adds them all up. If a company employs more than a handful of people, it quickly arrives at the position where it must employ an extra person simply to keep abreast of all the forms, red tape and regulation. That is the cry of British business, both large and small, and it is why we must be careful not to allow the Bill to heap more burdens on business. We have to navigate between the proverbial American rock and the hard place—between the good of improving competition and helping consumers and the bad of harming business and indirectly harming consumers who, after all, are either employed by them or consume their products at a particular price. We must be careful and it is no good Ministers pooh-poohing over-regulation. All they need to do is talk to business organisations up and down the country. 
 I make no apology for again quoting The Independent—hardly an organ of the Conservative party—on the Bill: 
''these are largely candy floss measures which fail to address the main problem facing Britain's enterprise economy—namely the growing burden of regulation, especially as it concerns the labour force . . . the Government's pro-business agenda is at odds with its social objectives, for business will always do best if the Government simply gets out of its way.''

David Borrow: I am puzzled and would be grateful for clarification. I understand the hon. Gentleman's argument that a provision should be inserted into the Bill to make details of costs incurred by businesses available in the annual report. That may be useful information to have in the public arena, but I am unclear about the policy objectives of publishing it. Is it to add to the burdens of business in having to produce the information in the first place, or to discourage the OFT from being thorough and rigorous in its work on fair trading in the UK? I would be grateful for the hon. Gentleman's clarification.

Nigel Waterson: The hon. Gentleman offers me a choice, which I happily decline. The purpose is certainly not putting information into the public domain merely for the sake of it, nor is it to stop the OFT being ''thorough and rigorous''. Rather, it is intended to tell the outside world—perhaps more importantly the OFT—the effects of its actions in the real world. OFT people will operate not in a vacuum, but in the world of business and industry. They must appreciate the sheer cost—dramatic examples exist from recent years—of major investigations either into a particular sector or into a specific company. They must be made to realise those costs. They may be wholly unaffected and unimpressed, believing that it is a matter that they do not need to take into account.
 We say that they should take it into account. As legislators we cannot wave goodbye to an Act and forget about it. It is our job—and the Government of the day's job—to ensure that it does not work to people's detriment. We hope that this Government and their successor Conservative Government will examine the annual reports closely. If the OFT is causing massive costs to business with no particular benefit to consumers, I hope that Governments will look again and perhaps amend the legislation. The Opposition inevitably have limited ambitions in this context. We simply want to make it a requirement to put the information into annual reports. If the OFT, Ministers and everyone else, including the hon. Member for South Ribble, ignores it, we can do little about it. We should focus on the issue and it should be built into the Bill.

Jonathan Djanogly: I certainly support amendment No. 3 and others grouped with it. The annual plan is an excellent idea that should improve accountability and transparency. As always, questions surround these matters. Will the report include figures for the costs of running the OFT as well as the costs of individual investigations?
 It is important that individual taxpayers appreciate the cost of regulation. To spend £50 million of taxpayers' money on an investigation that uncovers business irregularities that deprive consumers of £1 million or £2 million may technically be in the public interest, but I am sure that the vast majority of taxpayers—depending on the circumstances and every circumstance will be different—will say that it would be best to save the £50 million. I do not give a specific example, but clearly matters must be judged on a case-by-case basis. The report should be transparent so that it gives the public the opportunity to take a view on whether the position is right or wrong.

Tony McWalter: I am not sure that I quite follow the hon. Gentleman's argument. If such an investigation extirpated a practice so that it was no longer carried out by other companies and rendered companies that were performing fairly financially stable, the benefits would go well beyond the particular action that he describes. Sometimes, actions have beneficial consequences that go well beyond the particular cases that are being dealt with.

Jonathan Djanogly: I do not disagree with the hon. Gentleman. In certain circumstances he may be absolutely right, but in others, on a straight cost-benefit analysis, it would not be appropriate to spend the amount of money involved in the investigation.
 We have an opportunity to provide people with the information on which to take a decision. The information should be presented in the report in such a format that people can take that decision about particular investigations, especially major investigations where the costs will be more significant. The question of the independence of the OFT is important here. It leads on to what is an inappropriate use of taxpayers' money. 
 On amendment No. 4, it is important at every stage of the Bill that we consider how its provisions will affect enterprise. That was discussed at some length on 
 Second Reading, but a balance must always be struck between the good that it does enterprise and the possible bad that certain provisions will do, because of extra regulations for business and so on. Amendment No. 3 deals with the costs to the taxpayer, but to encourage enterprise it is vital also to have regard to the costs of regulation on companies, with which amendment No. 4 deals. As much as the costs themselves, companies may fear that unnecessary meddling and investigation by Government can hurt them or in some cases destroy them. It could be argued that the notion that companies are fearful of DTI or OFT investigations or heavy-handedness is mere bluff on the part of companies. But that concern is very relevant for many of them. It is sometimes hard for people to understand how bureaucracy can affect a company, unless they have been there at the sharp end. I shall recount two examples that I have heard from companies of their dealings with the Department of Trade and Industry. 
 The first example is from a few years ago and concerns a company listed on the London stock exchange. It operated a technology support business of a type that had existed for at least 20 years. One day a letter from the DTI arrived at the company and with all its market competitors, stating that although the multi-national and multi-billion pound sector had always described itself in a certain way, it was the preliminary view of the DTI that it was another sort of business altogether. That different business required regulatory approval, the costs of which would have destroyed the sector overnight. 
 Some 18 months later, after an enormous sum of money had been spent on lawyers, and directors and shareholders had had an enormous amount of worry, the companies in the sector finally received notice from the DTI that, to use a colloquial expression, it looked like an elephant and was actually an elephant even though the DTI had being saying that it was not. 
 The fact that the companies nearly lost their business and that the country would have been worse off because of that, was presumably not high in the minds of the people responsible at the DTI. Neither were the facts that it cost the businesses tens of thousands of pounds in fees to prove their point, that their market reputations were hurt and that they had to disclose the investigation in their public accounts.

Nigel Waterson: To return to a point made by the hon. Member for Hemel Hempstead (Mr. McWalter), does my hon. Friend, as an expert on such matters, believe that a company would have to disclose in its annual accounts if it was the subject of an OFT investigation?

Jonathan Djanogly: It would depend on the circumstances, but an OFT investigation would probably be a public issue anyway, so the company would want to consider its response. If a leak of information from the investigation affected the company's share price, it might have to make an announcement on the back of that. There are many different ways in which confidential information coming out of the company could lead to it being damaged, although that is the subject of later amendments.

Nigel Waterson: Did my hon. Friend notice, as I did, the widespread and detailed media coverage of some recent dawn raids by the Serious Fraud Office on pharmaceutical companies and others that were alleged to be involved in a cartel? Does he share my puzzlement about how so much detail about the investigation and its immediate aftermath found its way into the media?

Jonathan Djanogly: I agree absolutely with my hon. Friend, and we will have to discuss the subject carefully later. At the moment, the investigatory powers lie with the DTI, so the only examples that we can give relate to DTI powers. However, the OFT powers will be increased by the Bill.
 I explained how an investigation's atmosphere caused dramatic problems for all the companies in one particular sector. At least the companies had the funds with which to defend themselves against the deep pockets of the state. Unfortunately, 85 per cent. of companies in this country are not listed, have fewer than 10 employees and have shallow pockets. The problem is that even if they were in the right, they could not survive the cost of the investigations. 
 My second example comes from a few years ago. In this case, the company, together with a handful of other companies, hit on a new idea and effectively created a new market. The letter came in—

It being One o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order. 
 Adjourned till this day at half-past Four o'clock.